With significant productivity challenges and heightened expectations of technology to drive improvement in construction, it’s unsurprising that our industry is increasingly turning to technology partnerships for answers.
I recently attended the IDC Digital Summit in Munich, and what struck me was the overwhelming commitment to creating innovative solutions and competitive advantage by partnering with new technology companies to solve ‘old’ construction problems. In the face of war stories about partnerships that hadn’t delivered expected results, most held to the belief that through collaboration we can achieve more.
Technology partnerships are unique when compared to traditional construction JVs. They are intellectual property rich, require high degrees of open innovation, and combine capabilities across industries.
So how do we ensure these partnerships work and maximize our chances of success? Here are my five guiding principles for selecting the right technology partner.
1. Objectives – From the outset, it’s essential to discuss and agree mutual objectives to align both partners’ interests. This sounds obvious, but some organisations are driven by volume point sales whilst others concentrate on long term client relationships. Similarly, some construction organisations leverage technology as a route for their core business which can be at odds with the technology play. Ultimately, there is a need to openly share, discuss and agree objectives to avoid conflict when deciding which opportunities to pursue and ensure appropriate levels of support post sale.
2. Operating models – This can be particularly challenging when one partner operates on a time and materials basis (inputs) alongside a partner who only measures success through licence sales (outputs). Attempting to reconcile equal investment can prove difficult in this scenario which over time can be another source of discontent. Exploring and understanding interoperability of both organisations when you’re firstforming an alliance is a key task that should not be overlooked.
3. Culture – Cultural compatibility is key to successful partnerships yet cultures in technology and construction organisations are typically very different.
Technology organisations are very sales focused and driven by hard financial stops whereas construction organisations tend to be less aggressive on the sales front. These alternative cultures can form a potent blend to accelerate outcomes or prove catastrophic during delivery. Again, this should not be overlooked when selecting a ‘best fit’ partner.
4. Governance – For new partnerships, the choice of governance system is perhaps one of the most critical decisions to ensure the partnership operates as intended. Governance is achieved through formal (contracts), semi-formal (management) and informal (relational) mechanisms. There is extensive research on the pros and cons of each approach, but for technology partnerships the answer lies with a unique blend of all three. Using a construction analogy, a robust contract provides the foundation of the governance system, and management controls provide the structure that can be adapted over time, whereas relationships create a healthy environment for teams to work productively. Continually adapting the governance system as the partnership matures is critical.
5. People – People fuel partnerships and a high performing team can deliver exceptional levels of innovation and value. As relationships mature and mutual trust is established, partners focus more on delivery and less on commercial distractions. Strong relationships can quickly resolve potential issues, improve information sharing and enable partners to work comfortably with grey areas. Unfortunately, a change of key personnel can be problematic, so it’s recommended that a collaborative approach is taken to resourcing from the outset.
Every organization looking to form a technology partnership needs to consider these five points when selecting a partner and assessing whether they are ‘best fit.’ The aim is to achieve the right balance of control with agility, and ensure partners feel safe and able to commit to long term technology development.
The temporary and voluntary nature of these kinds of partnerships means there can be no guarantee, but with the right design, level of commitment from partner organisations and people, the rewards can be substantial. And well worth the investment.